Jamaica Money Market Brokers Limited (JMMB) has been given the green light to acquire an additional 50 percent share of the Intercommercial Banking Group Limited (IBL Group) to bring its stake in the company to full ownership. As a result JMMB, in just over a year, will almost double its assets from J$125 billion to $200 billion.
The acquired entity is a commercial bank in Trinidad & Tobago and not large by any standards as far financial institutions are concerned but it puts the Group in a position to gain market share in a country that seems to have started to grow again. By comparison, IBL Group is about the size of Mayberry Investments.
The IBL acquisition will add almost TT$1.55 billion in total assets that it held on its books at March (roughly J$14 is equal to TT$1). IBL assets enjoyed an increase of TT$336 million or 28 percent over the prior year and was mainly driven by the growth in the loan portfolio which moved from TT$488 million to TT$733 million. At the end of March, JMMB’s investment in IBL group stood at J$808 million for which they paid $331 million as indicated in the audited accounts. The data on IBL finances suggest that JMMB could have paid at least J$500 million for the added 50 percent ownership.
JMMB in a release on Friday confirmed that the Central Bank of Trinidad and Tobago has completed its assessment of JMMB`s application to acquire the additional fifty (50) percent of the shares of Intercommercial Bank Limited and Intercommercial Trust and Merchant Bank Limited, and has granted its approval to acquire the shares and become the 100 percent shareholder.
Profit | The Intercommercial Banking Group Limited (IBL Group) generated increased profit for the year ending March 2013 with a net profit after tax of TT$10.2 million, an increase of TT$5.7 million over the previous year but they reported a loss of JS$25 million in the quarter to June.
The banking group is operating in an economy of high levels of local currency liquidity, low interest rates and lackluster economic activity which have negatively impacted the demand for credit. Against these economic realities, IBL Group intensified its loan growth campaign which started in November 2011, and has been able to achieve an increase in net interest margin of 18.73 percent or TT$7.99 million to TT$50.66 million. Net interest income accounts for 61 percent of the total operating income of the Group. Interest income on loans and advances increased by TT$11 million or 26 percent while investment income fell by TT$2 million as a result of the low interest rate environment, as well as portfolio rebalancing into more liquid assets.
The Group’s operating expenses for the year was reported at TT$63.5 million, up TT$6.7 million or 12 percent over the previous financial year. IBL’s growth and expansion strategy over the past 17 months has contributed to this increase, the main drivers of which were staff related expenses and advertising and marketing expenditures.
Staff costs, the largest component of operating expenses, totaled TT$35 million to March, representing an increase of TT$4.6 million or 15 percent. In addition to the opening of the Tunapuna branch and the resultant incremental staff count, several key management positions that were vacant in previous financial year were filled in the 2012/13 financial year.
Client Deposits | In their annual report to shareholders, JMMB stated, “The total client deposit portfolio grew by 28.2 percent in the financial year which is consistent with the increase experienced in the loan portfolio. This represented a TT$66.2 million growth in savings and a TT$284.3 million growth in time deposits. The Group continued to focus on diversifying its deposit portfolio by expanding its core deposit (savings and demand accounts). While these efforts had some success in the year, we expect that more positive results will be seen in the coming months when several key initiatives in channel distribution are rolled out across the branch network.”
JMMB is an IC Insider Buy Rated stock. In 2011, JMMB placed third in the Investor’s Choice’s Champion Company award that recognizes management excellence.
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